Transcript of IGCSE Business Studies - Business classification

The primary sectorThe primary sector uses natural resources. It includes activities such as agriculture, forestry, hunting, fishing, water management, etc.

The main task of this sector is to extract resources from nature in order to consume and sell them. People employed in this sector are usually miners, hunters, farmers, etc.

The secondary sectorThe secondary sector deals with the transformation of raw materials into products. The main task of the secondary sector is to process raw material in order to manufacture products. This sector includes various industries, civil engineering, and crafts.People employed in this sector are usually factory workers, tailors, craftspeople, etc.

The tertiary sectorThe tertiary sector is the service sector. It includes services such as transportation, trade, tourism, the hospitality industry, administration, banking, education, health care, etc. People employed in this sector are bankers, accountants, pilots, waiters and so on.

Business sectors in different countriesThe private and the public sectorMarket is the place where supply and demand meetGovernments regulate market relations, by creating rules and laws which affect the structure of the buyers and sellers participating on the market.

They do it by:banning the trade of certain productsintroducing high taxes for products or services in order to limit sales (e.g. cigarettes) providing products that are equally as important for everyone, e.g. medical care.

The level of government intervention is determined by the type of economy companies and consumers operate in.

In the market economy, the sellers and the buyers determine the market prices and governments don’t influence market relations.

In a mixed economy, the influence is shared by sellers, buyers and governments. A mixed economy is a common feature of almost every country.

In a command economy, the influence on the market is completely obtained by the government. The private sectorThe private sector comprises companies started by private individuals or groups, rather than governments.

In most cases, the main goal of private sector companies is to make a profit.

The public sectorThe public sector, run and funded by governments, is very different from the private sector. For example, India subsidises the construction of the railway so that others could use it. Other examples include police departments, the education system and the army. Governments fund these services as well as those which are in critical condition, i.e. inefficient.

Business goalsBusiness goals differ depending on the activity.

For some companies, the main goal is to generate a profit, dividend income (share income), while other organisations aim to develop the infrastructure, fight poverty, develop the industry, etc.

Business goals differ due to their structure.

Charity and nonprofit organizations invest money in order to aid specific projects.

Private and public companies in a mixed economyA mixed economy includes both private and public companies.

Nationalisation is a process in which a government takes over a private company or its production.

The opposite process is privatisation, where a private sector company takes over a government-owned enterprise.

Chain of production:

the production and the supply of goods to the final consumer involves activities from primary, secondary and tertiary sector businesses.